Benzinga | Nov 30, 2020 11:51AM EST

Insider Sells Analog Devices Stock



A Form 4 filing filed with the SEC on Monday, November 30 showed that SVP & CFO Mahendra-Rajah Prashanth sold 3,625 shares of Analog Devices Inc (NASDAQ:ADI) at an average price of $138.41. The transaction moved the executive's stake in Analog Devices Inc. to 15,184 shares. Shares of Analog Devices fell by 0.1% from the previous closing price. A

Why Insider Transactions Are Important?

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not overvalued. Insiders who sell stock at new lows could be anticipating some capitulation moment. If the insider sells at new highs, it could point to the intention to "take some profit" and "lock in a gain."

Transaction Codes To Focus On

Investors prefer focusing on transactions which take place in the open market, indicated in the Form 4 with codesP for purchase and S for sale. An open-market transaction means the insider went into the market of their own volition and made an active decision about the potential path for a company and its stock moving forward.

Transaction codes other than P or S are often viewed with less conviction as they are often not tied to a decision by the exec. As an example, transaction code C indicates the conversion of an option. Transaction code A indicates the insider may have been forced to sell shares in order to receive compensation the exec was promised upon being hired by a company.